A five-year long-term incentive plan at Goldman Sachs (NYSE: GS) is about to vest. Based on the current share price, the bank's most senior executives are expected to receive more than $500 million in special bonuses, one of the largest payouts of its kind in the Wall Street bank's history.
According to Bloomberg, about 20 executives will receive these awards, which are expected to be finalized later this month. Chief Executive Officer David Solomon will receive more than $100 million; President John Waldron, who is seen as the CEO successor, as well as business heads Ashok Varadhan, Dan Dees and Marc Nachmann, are also among the beneficiaries.
The awards come from the "Shareholder Value Creation Award" that Goldman Sachs (NYSE: GS) launched in 2021. In October of that year, the board first granted awards to Solomon and Waldron: Solomon received 73,264 performance share units and Waldron received 48,843, worth about $30 million and $20 million respectively at the then share price. In January 2022, the board extended awards with the same terms to members of the management committee.
Whether the awards vest, and how much they vest for, depends on strict performance thresholds: Under the calculation rules, 50% of the vesting is based on absolute total shareholder return (TSR) and 50% on relative TSR, with all targets set in advance by the board. For the comparison benchmark, the grant price was calculated at $409.48; the peer group for relative TSR consists of Bank of America, Citigroup, JPMorgan, Morgan Stanley, Bank of New York Mellon and Wells Fargo. As for how the awards are delivered, executives must remain employed throughout the five-year performance period, and the awards will be delivered in the form of Goldman Sachs (NYSE: GS) stock at about the fifth anniversary of the grant.
The final value of the bonus pool depends on Goldman Sachs (NYSE: GS) stock performance relative to its peers through the end of October, so the amount may still change. Goldman Sachs (NYSE: GS) said the awards were set up with three main goals: linking pay to strict performance thresholds that drive long-term shareholder value, ensuring leadership continuity for more than the next five years, and strengthening retention in an environment of intensifying competition for talent.
These are not the only special awards Solomon and Waldron have received in recent years. In January 2025, Goldman Sachs (NYSE: GS) granted Solomon and Waldron 130,508 restricted stock units each, valued at $80 million on the grant date, with a five-year vesting period. Unlike the 2021 awards, these retention awards have no performance metrics and only require the two to stay with the firm.
Solomon's annual pay is also rising. Goldman Sachs (NYSE: GS) paid him $47 million last year, an increase of more than one-fifth from the previous year and the highest level since he took the helm of the bank. Goldman Sachs (NYSE: GS) is not an isolated case. During the 2021 boom in trading, SPACs and "meme stocks," several Wall Street banks rolled out special leadership incentive plans, among which the more closely watched was the long-term award to JPMorgan CEO Jamie Dimon, now worth about $270 million. Goldman Sachs (NYSE: GS) is expected to report third-quarter results next week. Combined with the stock's performance through the end of October, the final payout amount will become clearer by then.